Countrywide Financial Case
Introduction
Countrywide Financial Corporation projected being the largest real estate mortgage company in the United States. In 1969, Angelo Mozilo and his partner David Loeb, founded Countrywide in New York with the vision of providing a diversified real estate lending service. The company’s intentions were phenomenal as well as the initial profitability; however, unethical behavior took place within the company causing a huge loss. The predatory lending actions relied on fraudulent and misconduct behaviors convincing homeowners to agree on the loan terms without correct disclosures.
Strategies
Countrywide Financial Corporation exploited strategies to help increase the company’s market value which reached 24 billion in 2006. They offered …show more content…
The lack of internal and external control also contributed to an uproar in Countrywide Financial. Finally, the disorder of land and capital market became an insignificant indication of their need for change.
Opportunities
Countrywide Financial was in a predicament and Bank of America offered to help the corporation face the lawsuits and ethical discrepancies. Bank of America had plans to make radical changes to the company and expand into international markets. The extensive mortgage skills Countrywide offered would definitely be a beneficial factor for Bank of America in the industry. The competitive advantage was definitely an opportunity that could benefit the company and initiate major profitability.
Threats
Financial regulators posed a major threat to the corporation through the real estate investments triggering a decrease in profit. Due to the economic crisis, the decline in the housing market made a significant impact on the corporation. The loss of jobs resulted in homeowners foreclosing because they could not sell their home without still owing on their house note. “With record numbers of mortgages in default, a general liquidity crisis began to unfold which led to an overall loss of confidence in the U.S. financial system” (Gamble & Thompson, …show more content…
Refinancing and home equity loans were on an all-time high due to the appreciation in the housing industry. Opportunities in real estate became available for making a quick profit in buying and selling homes. Unfortunately, in 2007 the economic crisis pushed the housing bubble over the edge causing many properties to go underwater. The insignificance of consumers losing jobs and low income due to the recession put the homeowners in a real bind.
Conclusion
In conclusion, Countrywide Financial Corporation, anticipations of being the largest real estate originator turned out being the largest real estate failure. The lending practices within the company became a real threat forcing unethical and illegal actions. In order for Bank of America to revamp the company there needs to be a strategy approach of proper lending practices in place. Strategic planning plays a major role in the success of a company and should keep the best interest of their customers as well as the company’s long-term financial
Countrywide Financial Corporation projected being the largest real estate mortgage company in the United States. In 1969, Angelo Mozilo and his partner David Loeb, founded Countrywide in New York with the vision of providing a diversified real estate lending service. The company’s intentions were phenomenal as well as the initial profitability; however, unethical behavior took place within the company causing a huge loss. The predatory lending actions relied on fraudulent and misconduct behaviors convincing homeowners to agree on the loan terms without correct disclosures.
Strategies
Countrywide Financial Corporation exploited strategies to help increase the company’s market value which reached 24 billion in 2006. They offered …show more content…
The lack of internal and external control also contributed to an uproar in Countrywide Financial. Finally, the disorder of land and capital market became an insignificant indication of their need for change.
Opportunities
Countrywide Financial was in a predicament and Bank of America offered to help the corporation face the lawsuits and ethical discrepancies. Bank of America had plans to make radical changes to the company and expand into international markets. The extensive mortgage skills Countrywide offered would definitely be a beneficial factor for Bank of America in the industry. The competitive advantage was definitely an opportunity that could benefit the company and initiate major profitability.
Threats
Financial regulators posed a major threat to the corporation through the real estate investments triggering a decrease in profit. Due to the economic crisis, the decline in the housing market made a significant impact on the corporation. The loss of jobs resulted in homeowners foreclosing because they could not sell their home without still owing on their house note. “With record numbers of mortgages in default, a general liquidity crisis began to unfold which led to an overall loss of confidence in the U.S. financial system” (Gamble & Thompson, …show more content…
Refinancing and home equity loans were on an all-time high due to the appreciation in the housing industry. Opportunities in real estate became available for making a quick profit in buying and selling homes. Unfortunately, in 2007 the economic crisis pushed the housing bubble over the edge causing many properties to go underwater. The insignificance of consumers losing jobs and low income due to the recession put the homeowners in a real bind.
Conclusion
In conclusion, Countrywide Financial Corporation, anticipations of being the largest real estate originator turned out being the largest real estate failure. The lending practices within the company became a real threat forcing unethical and illegal actions. In order for Bank of America to revamp the company there needs to be a strategy approach of proper lending practices in place. Strategic planning plays a major role in the success of a company and should keep the best interest of their customers as well as the company’s long-term financial